Listen.
You typed the question. You are sitting somewhere, kitchen table, maybe, and the payment came out this morning and there is nothing left and you are wondering, what now. What can they do to me.
So let me answer it. Straight. No dance.
If you default on a merchant cash advance, here is the truth of it: they can take you to court. They can win a judgment. And with that judgment they can freeze your business bank account, levy it, go after the receivables, and, if you signed the personal guarantee, come after you, the person, not just the company.
That is the real list. That is what is real.
Everything else, the phone calls, the threats, the man who says he is sending someone, the "we will ruin you by Friday", much of that is theater. Bluff. Pressure dressed up as power.
You understand? You have to learn to tell the two apart. Because the fear makes them all look the same. The fear makes a threat sound like a sheriff at the door. It is not the same.
Let me go slower.
The judgment. This is the key that turns the lock. Without a judgment, an MCA company is just a creditor sending emails. With a judgment, the bank account is theirs to freeze. So everything turns on: how do they get the judgment, and how fast.
Two ways.
One, they sue you. Breach of contract. You missed payments, you broke the deal, they file. You get served. You have a window, often twenty, thirty days, check your state, to answer. And here is where people lose everything without a fight: they get scared, they hide from the papers, they do not respond. And the court gives the funder a default judgment. Not because the funder was right. Because you said nothing. Silence is how you lose. Do not be silent.
Two, and this one is faster, uglier, the Confession of Judgment. The COJ. Did you sign one? Pull your contract. Look. Because if there is a COJ in there, you may have already agreed, before any of this, that if you default they can walk into a court and get a judgment without even telling you. No lawsuit you can answer. No day in court. Judgment can land in a day or two. Account frozen days after. You find out when the card declines.
Now, breathe. There is good news buried in this.
New York changed its law back in 2019. A COJ can no longer be used against an out-of-state business in New York's courts. Many of these contracts route everything through New York. So if your business is not in New York and they filed a COJ there after that change, it may be voidable. May be. Other states, Pennsylvania, Ohio, Virginia, still allow similar instruments under other names. This is exactly the place where you stop reading and you call a lawyer. Today. Not next week.
Now the question you are really asking, the one under the question.
Can they reach my OTHER account. The personal one. The one I moved money to.
Not directly. Hear me. The ACH authorization you signed, that lets them pull from the account you GAVE them. That account. Not every account you own. They cannot just reach across the table and pull from an account they were never authorized to touch. To get to another account, they need the judgment, and then a levy. Court first. Then the reach.
Can they take my house.
Usually not by snatching it. A house is taken, when it is taken at all, through a judgment lien, and even that is harder than they want you to believe. A New York judgment does not automatically become a lien on a home in another state; they would have to go to YOUR state, register the judgment there, then try. And some states protect the home hard. Florida, the homestead exemption there is enormous. Your state has its own rules. Check them. The man on the phone saying "we'll take your house tonight", that is breath, not law.
Now. Let me tell you about the door nobody points to.
Reconciliation.
Look in your contract for that word. Reconciliation. Or "true-up." Or adjustment.
Because here is the deep thing about a merchant cash advance. It is not supposed to be a loan. On paper, legally, it is a PURCHASE, they bought a slice of your future sales. And if they truly bought a percentage of what you sell, then when sales fall, the payment is supposed to FALL with them. That is the whole theory of the thing. That is what makes it legal instead of an illegal loan.
So when you tell me "the payments are more than I make, it is killing my business", listen to what you just said. You said something legally enormous without knowing it.
Because if they are taking a fixed amount no matter what you earn, and they refuse to adjust when your revenue drops, then they are not buying your sales anymore. They are demanding a fixed sum no matter what. And a fixed sum owed no matter what, that is the definition of a loan. A loan. And if it is a loan, then the interest rate matters. And these things carry rates of sixty, ninety, a hundred and fifty percent and higher. In New York criminal usury is twenty-five percent. You see where this goes?
That is the thing that can flip the whole table. If a court recharacterizes the advance as a usurious loan, the deal can collapse, and that personal guarantee you signed, the one that scares you most, can become unenforceable along with it.
I am not promising you that. No one honest can promise you that. It depends on your contract, your state, your facts. But it is real. It is a door. And the funder does not want you to know the door is there.
So. What do you do today.
Find the contract. The whole thing. Read it for three words: confession of judgment, personal guarantee, reconciliation.
Do not close the bank account in a panic. I know the instinct. The money is leaving, you want to slam the door. But many contracts say revoking the ACH or yanking the account is itself a default, it can trigger the acceleration, the whole balance due at once, sometimes a penalty fee, and it hands them a fresh story to tell the court about you running. Do it wrong and you make your case worse. There are right ways to stop the bleeding. Talk to a lawyer before you touch it.
And know this, the FDCPA, the law that protects regular people from abusive debt collectors, mostly does NOT cover business debt. This is commercial. So the protections you assumed you had, you may not. Some states have their own unfair-practice laws that reach further. State by state. Check yours.
Call an MCA-defense lawyer. Not a debt-settlement salesman. A lawyer. Before the judgment, you have leverage. After the freeze, you are negotiating from the floor.
One more time, so it lands: the threats are loud. The law is quiet. Learn the difference and the fear loses half its teeth.
This is not legal advice. I have not read your contract and I do not know your state, and both of those decide your real answer. What I have given you is the map. A lawyer reads the actual ground.
Now stop sitting with it alone. Make the call.
This is the work Delancey Street does: a business-debt-only firm, attorney-backed, that settles merchant cash advance debt on a performance basis, with no fee until a settlement exists. The first call is a diagnosis, not a commitment, and it costs nothing.